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MANSOOR AHMED
WINDING UP OF COMPANY
ACKNOWLEDGEMENT
MANSOOR AHMED
WINDING UP OF COMPANY
SUBMITTED TO;
SUBMITTED BY;
MANSOOR AHMED
CLASS;
Reg;
102/SE/BSEF/04/F08
Faculity;
ISLAMABAD
MANSOOR AHMED
WINDING UP OF COMPANY
MANSOOR AHMED
WINDING UP OF COMPANY
INTRODUCTORY REMARKS
The term ‘winding up’ of a company may be defined as the proceedings by which a
company is dissolved (i.e. the life of a company is put to an end). Thus, the winding
up is the process of putting an end to the life of the company. And during this
process, the assets of the company are disposed of, the debts of the company are
paid off out of the realized assets or from the contributories and if any surplus is
left, it is distributed among the members in proportion to their shareholding in the
company. The winding up of the company is also called the ‘liquidation’ of the
company. The process of winding up begins after the Court passes the order for
winding up or a resolution is passed for voluntary winding up. The company is
dissolved after completion of the winding up proceedings. On the dissolution, the
company ceases to exist. So, the legal procedure by which the existence of an
incorporated company is brought to an end is known as winding up.
LIQUIDATOR
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WINDING UP OF COMPANY
name and on behalf of the company and for that purpose to use in the
company’s seal when necessary.
8. To prove, rank and claim in the bankruptcy, insolvency or sequestration of
any contributory for any balance against his estate and to receive
dividends as a separate debt due from the bankrupt or insolvent in the
bankruptcy.
9. To draw, accept, make and endorse any bill of exchange or promissory
note in the name and on behalf of the company.
10. To raise on the security of the assets of the company any money.
Only a limited company can be wound-up. The term "winding-up" (or "wound-up") bears
a similar meaning of "liquidation". It generally means that all the assets of the company
would be realized (sold off and converted to cash) through a legal process in order to
repay its debts. Winding-up would bring a company to an end.
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WINDING UP OF COMPANY
You can get a general picture on the winding-up procedures (except "voluntary Winding
up) from the following steps:
Firstly, issuing a written demand for debt repayment to the target company
Consequences of winding up
1 As regards the company itself: winding up does not mean that the
company has ceased to exist. The company exists as a corporate entity with all
the rights of such entity, with only change that its management and
administration is to be carried on through liquidator / liquidators till the final
dissolution of the company.
2 As regards the shareholders : A new statutory liability as
contributories comes into existence. Every transfer of shares or alteration in the
status of a shareholder, after the winding up has commenced by the order of the
Court , shall unless approved by the liquidator , be void.
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WINDING UP OF COMPANY
ii. They cannot proceed with the execution, if they have obtained
decrees already.
iii. They must lodge their claim and prove their debt before the
liquidator.
4 As regards the management, on appointment of liquidator, all the
powers of the directors, chief executive and other officers, shall cease, except
for the purpose of giving notice of resolution to wind up and appointment of
liquidator and filing of consent of liquidator etc.
5 As regards the disposition of company’s property, all such
dispositions are void unless with the leave of the Court or the liquidator.
Modes of winding up
The winding up of a company may be either-
(i) by the Court; or
(ii) voluntary; or
(iii) subject to the supervision of the Court.
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1. To pass Special Res olution by 3/4th majority of the members of the company
that the company be wound up by the Court in case if the company itself intend
to file a petition and to file the Special Resolution on Form 26 with the
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registrar.
2. To prepare a list of the assets to ascertain that the company is unable to pay its
debts.
3. To prepare a list of the creditors
4. In case of defaults in payments the creditor or creditors to make a decision for
the filing of the winding up petition.
5. In case if the Commission or Registrar or a person authorised by the
Commission intend to file a petition, they should not file a petition, for winding
up of the company, unless an investigation into the affairs of the company has
revealed that it was formed for any fraudulent or unlaw ful purpose or that it is
carrying on a business not authorised by its memorandum or that its business is
being conducted in a manner oppressive to any of its management has been
guilty of fraud, misfeasance or other misconduct towards the company or
towards any of its members.
6. To engage advocates for the preparation and filing of the petition.
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WINDING UP OF COMPANY
The following steps are to be taken for Member’s voluntary winding up under the
Provisions of the Ordinance, and the Companies Rules.
Step 1. Where it is proposed to wind up a company voluntarily, its directors
make a declaration of solvency on Form 107 prescribed under Rule 269 of the
Rules duly supported by an auditors report and make a decision in their meeting
that the proposal to this effect may be submitted to the shareholders. They, then,
call a general meeting (Annual or Extra Ordinary) of the members (Section 362 of
the Ordinance)
Step 2. The company, on the recommendations of directors, decides that the
company be wound up voluntarily and passes a Special Resolution, in general
meeting (Annual or Extra Ordinary) appoints a liquidator and fixes his
remuneration. On the appointment of liquidator, the Board of directors ceases to
exist. (Sections 358 and 364 of the Ordinance)
Step 3. Notice of resolution shall be notified in official Gazette within 10
days and also published in the newspapers simultaneously. A copy of it is to be
iled with registrar also.
Step 4. Notice of appointment or change of liquidator is to be given to
registrar by the company alongwith his consent within 10 days of the event.
Step 5. Every liquidator shall, within fourteen days of his appointment,
publish in the official Gazette, and deliver to the registrar for registration, a notice
of his appointment under section 389 of the Ordinance on Form 110 prescribed
under Rule 271 of the Rules.
Step 6. If liquidator feels that full claims of the creditors cannot be met, he
must call a meeting of creditors and place before them a statement of assets and
liabilities. (Section 368 of the Ordinance)
Step 7. A return of convening the creditors meeting together with the notice
of meeting etc. shall be filed by the liquidator with the registrar, within 10 days of
the date of meeting. (Section 368 of the Ordinance)
Step 8. If the winding up continues beyond one year, the liquidator should
summon a general meeting at the end of each year and make an application to the
Court seeking extension of time. (Section 387(5) of the Ordinance)
Step 9. A return of convening of each general meeting together with a copy
of the notice, accounts statement and minutes of meeting should be filed with the
registrar within 10 days of the date of meeting. (Section 369 of the Ordinance)
Step 10. As soon as affairs of the company are fully wound up, the liquidator
shall make a report and account of winding up, call a final meeting of members,
notice of convening of final meeting on Form 111 prescribed under Rule 279 of
the Rules before which the report / accounts shall be placed. (Section 370 of the
Ordinance)
Step 11. A notice of such meeting shall be published in the Gazette and
newspapers at least10 days before the date of meeting. (Section 370 of the
Ordinance).
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WINDING UP OF COMPANY
Step 12. Within a week after the meeting, the liquidator shall send to the
registrar a copy of the report and accounts on Form 112 prescribed under Rule
279 of the Rules. (Section 370 of the Ordinance)
(b)
A procedure has been laid down under the provisions of the Ordinance whereby the
company can also be voluntary wound up by creditors. For this purpose, the
company shall call a meeting of the creditors of the company to be summoned for
the day, or the day next following the day, on which there is to be held a general
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Step 4. The liquidator should, with all convenient speed, realise the assets,
prepare lists of creditors, admit proof, settle list of contributories, make such calls
as may be necessary, etc. accordingly as the nature of the case may require, pay
secured creditors, pay the costs including the liquidator’s own remuneration, pay
preferential claims, and after meeting all the claims of creditors, and after adjusting
all claims and rights, distribute the surplus on pro rata basis.
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Step 5. In the event of the winding up continuing for more than one year, the
liquidator shall summon a general meeting of the company and a meeting of
creditors at the end of the first year from the commencement of the winding up and
lay before the meetings an audited account of receipts and payments and acts and
dealings and of the conduct of winding up during the preceding year together with a
statement in the prescribed form and containing the prescribed particulars with
respect to the proceedings and position of liquidation and forward by post to every
creditor and contributory a copy of the account and statement together with the
auditors' report and notice of the meeting at least ten days before the meeting
required to be held.
Step 6. The liquidator prepares the accounts, gets them audited and also
presents a final report to the creditors. The steps at this stage are as under:
· The liquidator prepares a final report and accounts of the winding
up, showing how the winding up has been conducted and the
property of the company have been disposed of.
• Accounts are duly audited by the auditor appointed for the purpose.
• The notice of meeting is sent by post to each contributory of the
company and creditor at least ten days before the meeting. The
account with a copy of the auditor’s report is also enclosed with the
notice.
• The notice of the meeting specifying the time, place and object of the
meeting is published at least ten days before the date of the meeting
in the official Gazette and in at least one newspaper.
• Within one week after the meeting, the liquidator is required to send
to the registrar a copy of his report and account, and make a return to
him of the holding of the meeting alongwith the minutes of the
meeting.
• If a quorum is not present at the meeting, the liquidator makes a
return stating that the meeting was duly summoned and that no
quorum was present thereat. The return is filed with the registrar and
considered as presented in the meeting.
• The registrar, on receiving the report, account and the return, is
required to register them after their scrutiny.
• On the expiration of three months from the registration of final
report, accounts and minutes, the company is deemed to be
dissolved.
When a company has passed a resolution for voluntary winding up, the Court may
of its own motion or on the application of any person entitled to apply to the Court
for winding up a company, make an order that the voluntary winding up shall
continue, but subject to such supervision of the Court, and with such liberty for
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creditors, contributories or others to apply to the Court, and generally on such terms
and conditions, as the Court thinks just.
A petition for the continuance of a voluntary winding up subject to the supervision
of the Court shall, for the purpose of giving jurisdiction to the Court over suits and
other legal proceedings, be deemed to be a petition for winding up by the Court.
The Court may, in deciding between a winding up by the Court and a winding up
subject to supervision, in the appointment of liquidators, and in all other matters
relating to the winding up subject to supervision, have regard to the wishes of the
creditors or contributories as proved to it by any sufficient evidence, but subject to
the provisions which would have been applicable had the company been wound up
by the Court.
Conclusion:
After analyzing, it is found that the right to apply for winding up is the creature of statute
and not of contract. But it should be noted that the winding up proceeding are greatly
affected by the facts and circumstances of a particular case. The machinery of winding-up
cannot be used as a pressure tactics. It is the stage, where by the company takes its last
breath.
Source:
http://www.secp.gov.pk/
http://ezinearticles.com/?Understanding-The-Winding-Up-of-the-Company&id=944360
http://ezinearticles.com/?Winding-Up-a-Company&id=2570437
MANSOOR AHMED